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The 21st Century Israeli Economic Surge

Straight from the Jerusalem Boardroom #245

  1. 2000 to 2019:

*Population – from 6.2 million to 9.1 million (47% growth);
*Gross Domestic Product (GDP) – from $132BN to $404BN (206% growth);
*GDP per capita – from $21,000 to $44,000 (110% growth);
*Export – from $47BN to $117BN (149% growth);
*Women in the workforce – from 48% to 60% (25% growth);
*University/college students – from 70,000 to 316,000 (351% growth);
*Incoming tourists – from 2.31 million to 4.87 million (108% growth);
*Water desalination – from 2% to 26% (1,300% growth);
*Foreign exchange reserves – from $24BN to $119BN (396% growth);
*Government debt per GDP – from 77% to 58.5% (24.7% reduction);
*US “aid” per GDP – from 2.3% to 1% (57% reduction);
*Defense budget per GDP – from 9% to 5% (44% reduction);
*Tax burden – from 43% to 32% (26% reduction);
*Number of vehicles per 1,000 people – from 277 to 396 (43% growth);
*Emigrants per 100,000 people – from 340 to 160 (51% reduction).

Source: Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success.

  1. In 2010-2019, Israel’s hightech sector raised $39.1BN, mostly from foreign investors. In 2019, Israel’s technology sector raised $8.3BN, 30% over 2018, and compared to $2.1BN in 2010. In 2019, Artificial Intelligence firms raised $3.7BN (Globes Business Daily, January 9, 2020).
  2. In 2019, the Tel Aviv Stock Exchange featured more than 55% rate of return in the hightech sector, 70% in real estate and almost 30% in banking. In 2019, the total of hightech exits reached $10BN – twice as in 2018 – with a 30% rise in the number of transactions. The hightech sector rose 63% in 2019, twice as high as NASDAQ, and 200% since mid-2011.

The sustained growth of the hightech sector, during the recent 25 years, has been a byproduct of the unique interaction among Israel’s educational, (defense and commercial) industrial, military and academic/research infrastructures, bolstered by Israel’s brain-power and government assistance (Globes, January 20).

  1. Insight Partners, the NY-based venture capital fund, acquired Israel’s Armis (cyber and IoT – interrelated computing devices) for $1.1BN. In October 2019, Insight set, in Israel, its first overseas office. Since 1995, Insight invested $700MN in Israeli hightech companies.
  2. Koch Industries’ KDT Medical Investments increased its holding in Israel’s Insightec (medical equipment) by $100MN, in addition to a previous investment of $150MN (Globes January 7).

Previous issues of the Jerusalem Boardroom: https://bit.ly/2RAykCG




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Israel’s Covid-19 Economic Trends

Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

Foreign investment in Israel’s high-tech companies surged to new heights in the 1st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4th quarter of 2020 and double the volume of the 1st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

  1. Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
  2. Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
  3. Israel is ranked 12th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
  4. The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
  5. Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
  6. In 2020, Israel was ranked 20th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
  7. Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
  8. Israel’s foreign exchange reserves-to-GDP ratio of 41% (3rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
  9. During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
  10. Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

 




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